Choosing a health plan for your family can be a daunting experience.  It may be helpful to liken it to buying a new family car.  Like any major purchase, you need to do some research and decide on the how your family will be using it.  Will you opt for a more expensive model with all of the bells and whistles or is a more basic, compact car make more sense for your family and budget?  When was the last time you purchased a new car without doing some research prior to signing on the dotted line? Most people would say: “Never.”  At the very least, they check out the options, prices and consumer reviews prior to making such a large investment.

We can offer the same advice to health plan shoppers: do your research and consider how you want to use your purchase.

To make the right decision for your family, here are some tips to consider prior to making choosing the right plan for your family.

Affordability:  How frequently do you anticipate your family will seek medical care this year?

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Just because it’s the least expensive plan doesn’t mean that it’s the right one for your family.  Consider not only the affordability of the plan but also how frequently you think your family will access care annually. When looking at their health insurance option, many base their decisions on the cost of the monthly premium—the amount you will pay each month to maintain coverage.  But wait!  Just looking at the monthly cost is like looking at the wheels of a car without considering the rest of it: the true cost of a plan is more than just the monthly premium.

Looking at the whole package means considering:

  • The annual deductible (how much you will pay out-of-pocket before the insurance company will cover the cost of care);
  • The co-insurance (amounts you may need to pay for certain services);
  • The co-payment (the amount that you will give the doctor’s office each time you seek care);
  • The cost of prescription medication;
  • And lastly, the maximum out-of-pocket expenses you will be expected to pay each year.

There are a lot of factors to consider above and beyond what you need to pay each month to maintain coverage. Deciding the frequency on which you plan to seek services can help you decide if it makes more sense to pay a lower deductible and a higher co-payment because, right now, for example, you are relatively young, have little or no chronic health problems and do not have children.  It may make sense for you to pay less monthly because you don’t plan to access care frequently this year.  For others, with chronic medical concerns, it may make sense to pay a higher deductible because you plan on seeing many health practitioners this year and don’t want to pay expensive co-payments or co-insurance for services that are not 100% covered under the less expensive health plans.

Is your family eligible for Federal subsidies or a tax credit?

Under the Affordable Care Act (ACA), if you earn less than 400% of the federal poverty level (about $46,000 per year for a single person or $94,000 for a family of four), you may be eligible for government subsidies to help make your coverage more affordable. The subsidy varies depending on your actual income and the cost of care in your area.  A word of caution when applying for tax credits and subsidies; these benefits are based on your 2014 estimated income.  If you change jobs or receive a higher salary than what was originally reported, you may have to pay back all or some of the subsidy.  Of course, the converse is also true.  If you over-report your 2014 income and wind up making less than what was estimated, you may be due a subsidy reimbursement on your 2014 federal tax return.

There Are Choices Outside the Health Exchange

The ACA stipulates that most Americans must have health insurance by 2014 but that doesn’t mean you have to get insurance via the federal exchange.  While many will benefit from the subsidies and tax-credits, quite a number of the currently uninsured won’t.  If you don’t qualify for a subsidy, there is no harm shopping outside the exchange.  There are other insurance coverage options outside of what is being offered in the exchanges.  These plans will still comply with the Affordable Care Act.  You will also be protected from tax penalties.

Deciding which plan is right for your family isn’t easy.  That’s why breaking the choice down into simpler questions may make sense. Like shopping for a new car, prioritizing what’s most important in your health care package can often lead to making the right decision for your family.  It’s important to remember that there is no one right health plan for everyone but there may be a few that meet the majority of your family’s health needs.

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